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London (pte035/14.06.2005/13:20) - After failing to agree on terms for more than 100 stores across the region, Walt Disney http://www.disney.go.com , the US entertainment and media group, will not be selling its European retail chain.
"Following significant analysis," a Disney statement said, "the company has decided that there is a greater strategic interest in retaining the stores and maximising their growth potential. All negotiations with interested parties have stopped."
After the sale of 313 of its North American stores to The Children's Place, the US retailer, Disney's US stores accrued US$64 million in restructuring and impairment charges, which implies a further $40m-$50m working capital charge for the current fiscal year.
The European chain, whose sales have been up since a decline two years ago, had a carrying value of $36 million, and stores had lease obligations to the value of $206 million.
European stores had an operating income rise from $14m to $17m last September, and sales rose 17 per cent to $326m.
In comparison, US store revenues fell by 2 per cent to $628m, 11 per cent below the 2003 figure. Losses from the previous 12 months were reversed when North American stores had a $6m profit in the last financial year.
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